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News Article

Public-Private Cooperation Would Electrify Isolated Peninsulas

By Antonio Gozain | Thu, 03/10/2022 - 17:56

The territorial coverage of Mexico’s national electricity system is close to 99 percent. However, public and private sectors must collaborate to reach the full 100 percent. Energy quality should be improved substantially in some key areas such as the Baja California and Yucatan peninsulas, agreed industry experts.

“The country’s electricity supply must be reliable and cost-efficient. Solutions are often considered for to provisionally solve problems on the short term, due to budget cuts and the public sector’s debt. It is time to make a deep diagnosis and establish a long-term plan for the economic development of Mexico, taking advantage of technology, digitalization and energy efficiency,” said David Martínez, Director, Envision LATAM.

The history of electricity generation in Mexico began in 1879. On Sept. 27, 1960, when former President Adolfo López Mateos nationalized the electricity industry, the grid’s coverage was below 45 percent. Currently, CFE’s coverage provides electricity access to 98.95 percent of the country’s population, following 1,587 rural and Indigenous community electrification projects carried out in 2019. CFE has over 335,000 transmission towers and sub-transmission systems, including 110,187km of transmission lines and 2200 substations.

Historically, CFE has done a great job electrifying Mexico, said Aldrich Richter, Managing Director LATAM, Bergen Engines: “Currently, most parts of the country are interconnected and have access to electricity. The problem lies in the quality of electricity that reaches remote and underprivileged areas, which suffer from incorrect voltage, energy spikes and current variations. This slows down the development of these communities.”

Although there are several challenges linked to technology, grid capacity or resource availability, solutions are already out there, said Norma Almanza, Director, Generac LATAM. “Mexico’s big challenge is the change of mentality needed to adopt new technology,” added Almanza. This shift must occur in four different key areas: the government, manufacturers, technology suppliers and academia.

Changing this mentality is indeed essential, agreed Richter. “We must change the old vision of a utility-based centralized energy system and migrate to a decentralization of energy sources. Communities could become self-sustainable this way,” he continued. All challenges are solvable without major complications because technology is already there, he added. “It is about political will and investment,” decided Richter.

Although Yucatan and Baja California face similar problems, both have specific challenges to solve. “Both peninsulas need access to clean transition fuels, such as natural gas. They both have natural resources like wind, sun, as well as a great potential for battery storage systems. This technology has already been developed, now it should be implemented,” explained Richter.

Electrifying Baja California

Baja California’s gird system is interconnected to the US via two 230kV alternating current transmission lines. Baja California Sur’s electricity system is completely isolated from the national grid, however.

Baja California’s multitude of challenges begin with uncertainty in land tenure, said David Muñoz Andrade, CEO, Diurna Energy: “This challenge prevents the implementation of  electrification plans seeking to reach distant places such fishing communities and the mountains. In addition, demographic acceleration and migration have caused service regularization trouble in Tijuana, where small areas are left without electricity.”

Though Baja California faces serious supply challenges, its coverage looks decent, said Muñoz. “We are still missing 0.7 percent of coverage, which is the most difficult part either due to legal troubles or distance issues,” he added. Possible solutions include microgrids, distributed generation (DG) and isolated photovoltaic solar systems, he added. “Through public-private collaboration we can take solutions to these communities to achieve the 100 percent coverage, at least in Baja California,” Muñoz concluded.

Energizing Yucatan

Yucatan is a “paradise of opportunities,” said Martínez. However, it faces technical challenges. The state has a precarious energy supply due to its isolation from the rest of the national grid and insufficient access to the natural gas pipeline system, as reported by MBN. In 4Q21, Mauricio Vila Dosal, Governor of Yucatan, and Minister of Energy Rocío Nahle discussed CFE plans to construct two gas-fired combined cycle power plants in Merida and Valladolid, with a combined investment of over US$650 million.

The peninsula’s electricity demand grows by 8 percent per year, almost triple the Mexican average, said Martínez. “Currently, Yucatan misses an added installed capacity of 200MW. By summer 2022, the situation will worsen due to the heat,” he continued. CFE dispatches around 40 percent of the electricity used in Yucatan. “The company operates with obsolete power plants by using different fuels. Combined cycle centrals often operate using diesel. Power plants need to confront operational failures, intensive maintenance and fuel shortages,” continued Martínez.

On the other hand, the transmission line that connects Yucatan to the rest of the country presents yet another challenge, said Martínez: “Blackouts happen because the line is designed for up to 1050 MW. However, the line is oversaturated and overheated. CENACE frequently turns it off to protect it.” Solutions such as renewable energy plants and DG must be interconnected. Better long-term planning is required, with collaboration between the public and private sector,” he added.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst